Forex News (from InstaForex) - page 83
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Rbi Continues to Display a Clear Dovish Bias
The Reserve Bank of India (RBI) kept its key policy interest rates unchanged earlier this week, but continues to display a clear dovish bias, as indicated by its comment, that "going forward, the accommodative stance of monetary policy will be maintained, but monetary policy actions will be conditioned by incoming data." The RBI also appears confident in achieving its retail (CPI) inflation target of 6% by early 2016. The bank highlighted that potential upside risks to inflation (ie, weather aberrations, administered price hikes, geo-political factors) are counter-balanced by global deflationary/disinflationary trends, the still soft outlook for global commodity prices and the slack in the domestic economy. "We continue to forecast a 25bp cut in the repo rate in June. We would also not rule out the risk of further easing, but this will depend on greater clarity on 2016 inflation and the impact of a potential Fed rate hike in H2 2015." - Barclays Capital said in a report on Friday
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Swedish Inflation Data in Focus
Swedish inflation (Tuesday) is likely to dominate the agenda for the SEK in the coming week. In line with the projections and recent Riksbank rhetoric, market participants are looking for a further bounce in CPIF inflation to 0.3% m/m (1.1% y/y) from 0.8% m/m (0.9% y/y). Indeed, inflation has recently been surprising to the upside, with Riksbank officials acknowledging that currently easy monetary policy is having an effect. A further increase in inflation is likely to support the SEK against other European currencies such as the EUR and the NOK. "we remain cautious about a sustained SEK rally at this juncture given the Riksbank's recent emphasis on a strong SEK posing downside risks to the inflation outlook. Further ahead, we remain constructive on the SEK owing to positive fundamentals, an improved economic outlook and our expectations for further stabilization in inflation", Says Barclays
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Us Consumers Likely returned to Shops in March
After dismal private consumption in January and February, partly due to the harsh weather, a rebound is likely in March: retail sales likely to be seen up 0.9% m/m (consensus: 1.0%), boosted by solid car sales, after -0.6% in February. Standard Chartered notes: We see core sales ex autos and gas up 0.4% from -0.2% in February. This should fuel hopes that GDP will rebound in Q2 after hitting a speed bump in Q1. We see the gas-pump savings starting to boost US consumption gradually, many consumers having opted to pay down debt rather than spend on other items so far. We see growth of 1.0% q/q SAAR in Q1, accelerating to 3.0% in Q2.
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Bank of Canada may Stay Put at Its April Meeting
The Bank of Canada releases its policy decision at 10:00 ET on Wednesday, alongside its quarterly monetary policy report. "We think the overnight lending rate will be kept at 0.75%, as all analysts polled by Bloomberg also forecast. We do not entirely dismiss a rate cut - the memory of the 'surprise' January rate cut remains vivid", Says Standard Chartered Governor Poloz is not afraid of surprise moves - but the probability is relatively low. The tone as being dovish, and expect Governor Poloz to emphasise that the BoC remains open to cutting rates further later, depending on the data. A likely modest cut to the 2015 growth forecast (currently 2.1%) should add to the dovish slant.
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Poland Will Probably Exit Deflation This Year
Although a stronger PLN may extend the period of deflation, a turning point has been reached in the deflationary cycle that began in August 2014. The CPI bottomed out in February, and after increasing in March, and it will likely gradually increase in the forthcoming months, turning positive again by the end of Q4 15. The central bank expects deflation to come in at -0.5% yoy at the end of 2015. The Ministry of Finance expects the country to exit deflation sooner than the central bank is forecasting. It is possible, however, that a stronger PLN and volatile oil prices create uncertainty around the ministry's expectation. "In its recent World Economic Outlook, the International Monetary Fund forecast Poland's CPI to accelerate to 0.4% yoy at the end of this year. In our opinion, it will instead be in the range of 0.1-0.3%", said Societe Generale in a report on Thursday
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Canada: Cpi and Retail Sales Two Top Tier Data Releases Tonight
Tonight we get two top tier data releases in Canada: CPI and retail sales. A still-firm, but on-consensus CPI report is expected (RBC: core 2.1%y/y, cons: 2.1%), and considering the BoC seems to be more focused on activity indicators at the moment, that means the retail sales figure is more relevant and likely to get an FX reaction. The expectations are decently above consensus for retail sales (RBC: ex-auto 1.3%m/m, cons: 0.7%). That implies a CAD positive reaction, but that may only be a small influence compared to the direction of oil prices which have been the most important driver for CAD this week. RBC Capital Market Says "Our technical strategy team highlights 60.99 and 63.50 as the key levels above for WTI now that the long-held range has broken. For USD/CAD, they point out 1.2114 and 1.2066 as the key levels below, and see resistance located at 1.2253 and 1.2326"
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Treasuries Recover From Early Weakness Amid Sell-Off On Wall Street
After moving modestly lower in early trading Friday, treasuries showed a notable turnaround over the course of the trading day. Bond prices climbed well off their early lows to end the day firmly in positive territory. Subsequently, the yield on the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 1.85 percent. With the drop on the day, the ten-year yield extended a recent downward trend, ending the session at its lowest closing level in well over two months. The rebound by treasuries was partly due to a sell-off on Wall Street, with the Dow tumbling by more than 300 points at its worst levels. Concerns about developments overseas contributed to the pullback by stocks, leading some traders to move their money into the relatively safe haven of bonds. The early weakness among treasuries came following the release of the Labor Department's report on consumer price inflation in the month of March. The Labor Department said its consumer price index edged up by 0.2 percent in March, matching the increase seen in February. Economists had expected the index to rise by 0.3 percent. Core consumer prices, which exclude food and energy prices, rose by 0.2 percent for the third consecutive month. The uptick in core prices matched economist estimates. While the headline index was down by 0.1 percent compared to a year-ago, the annual rate of core price growth ticked up to 1.8 percent in March from 1.7 percent in February. The core price growth is more closely watched by the Federal Reserve. Rob Carnell, chief international economist at ING, said, "Given recent activity data weakness, which has seemed to all but rule out a June rate hike, this data adds an additional, but unhelpfully contradictory inflation element to the rate hike timing debate." "That said, it will need corroboration by activity data soon if it is not to be too late for a June hike, and that point of no return may have already been passed," he added. Following the slew of economic data released over the past week, the economic calendar for next week is relatively quiet. Nonetheless, traders are likely to keep an eye on reports on weekly jobless claims, durable goods orders, and new and existing home sales.
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Japan Tertiary Industry Index +0.3% In February
An index measuring tertiary industry activity in Japan was up a seasonally adjusted 0.3 percent on month in February, the Ministry of Economy, Trade and Industry said on Monday, standing at 100.5. That topped forecasts for a decline of 0.7 percent following the 1.4 percent gain in January. Among the industries moving higher were real estate, transport and postal activities, finance and learning support. Industries moving lower included retail, medical, utilities, personal services and compound services.
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Singapore Inflation Likely decreased Further in March
Singapore releases March inflation numbers on 23 April. On a seasonally adjusted m/m basis, inflation likely decreased to -0.1%. Singapore's current path of disinflation is temporary. Housing inflation likely continued to drag down headline inflation, as decreases in housing prices weighed on the rental market. Private road transport inflation was also likely dragged down by a sharper correction in ownership premiums on motor vehicles. In contrast, petrol duties implemented in February likely continued to support core inflation. A deflationary pressures is seen dissipating as the year progresses. "We expect inflation to have declined further to -0.5% y/y, versus the higher -0.3% recorded in February", says Standard Chartered.
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Taiwan Ip Data Likely to have slowed due to Base Effects
Taiwan is scheduled to release March industrial production (IP) data on 23 April. Weak export sales data during February-March and softer global oil prices likely impacted production output negatively in March. Residential and real estate construction activity is expected to have been dampened by the government's efforts to curb speculation in the residential property market. On the positive side, activity in the local retail trade and services sector likely remained robust, partly due to rising tourist arrivals, which supported IP activity. "We expect IP to have expanded by 2.0% y/y, the slowest annual gain since late 2013, partly due to base effects", says Standard Chartered.
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